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The State of Music Streaming in 2016: Today’s Top Players

The way that we discover, listen to and absorb music has drastically changed in the past decade. With seemingly never-ending supplies of artists and albums, and powerful recording software to save every song, the possibilities for absorbing music are simply too tempting to pass up. While this consumption has evolved with new technology and services, music consumers’ hunger for music is as strong as it ever has been.

In 2015, Nielsen found that 317 billion streams occurred – an increase of close to 93% from the 2014. The power of streaming services, as well as their consistent growth, has progressed as more music listeners adopt the notion of streaming artists digitally, rather than owning music in other physical forms.

As music streaming grows steadily in popularity, it naturally takes a cut out of other market segements like CD’s and digital downloads – down 11% and 3%, respectively. Surprising to some, vinyl records are the only physical form growing in popularity (a 29% increase from 2014), as listeners have begun to seek more nostalgic ways of consuming music. Nevertheless, streaming services are dominating the industry.

Top Players

Today’s biggest services in music streaming are now household names – Spotify, Pandora, Deezer, and most recently introduced, Apple Music.

Spotify

By far the leader in the music streaming market, Spotify experienced the fastest subscriber growth in the entirety of its 7 years in business in the last half of 2015 alone. Recent estimates put the company’s paying subscriber base between 25 and 30 million people, with their free plan reigning in 75-100 million.

Music Business Worldwide reported in June of last year that “Spotify was already the most heavily financed music service in history and it has nearly doubled its total investment in one single round, taking the total to more than $1.1 billion with a valuation of $8.5 billion. That translates to $55 of investment per subscriber.” This definitively makes them worth more than half of the global recorded music industry.

Apple Music

The Financial Times reported in January of this year that Apple Music has already surpassed 10 million subscribers. Why is this intimidating? The company only launched their music streaming service at the end of June 2015 – a mere 6 months ago – while services like Spotify have had their hat in the ring for several years.

With the added advantage of many peoples’ familiarity with Apple products and downloading music through iTunes, Apple is set up to scale their growth even bigger. If Apple keeps up this rate of paid subscriber growth, they are sure to reach 100 million in 6 years, compared to the 10 million that Spotify earned within same time frame.

Pandora

Still going (somewhat) strong in the market is Pandora, arguably the first and one of the best, streaming services out there. However, with the increase in rivalry among these music services, Pandora is falling out of the spotlight. After Apple announced the launch of Apple Music last summer, shares in Pandora fell by 35 percent in one day, wiping away $1.4 billion in the company’s market value.

In response largely to this threat, Pandora snagged streaming up-and-comer Rdio, aiming to grow more into Spotify’s market territory. Competitive threats aside, the company reported that sales in the third quarter jumped 30% to $311.6 million, compared to the same period a year earlier.

One Response to “The State of Music Streaming in 2016: Today’s Top Players”

Pandora, I think, made a major mistake when they stopped offering their discounted annual rate for premium users like me, and put those users on a monthly rate. I don’t mind paying for the service, but it gives users 12 reminders a year that they’re paying for it–in effect, twelve reminders to potentially cancel. I’d rather pay $60 a year than $5 a month.

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